Alternative data enables Oakam to lend over £320m

Oakam has attributed its success to the use of alternative data, which has allowed the lender to employ new methods of underwriting and risk management to expand credit access for financially excluded consumers in the UK, while maintaining robust lending standards.

“The democratisation of smartphone technology and internet access is unlocking innovation that will bring the world’s 2.5 billion financially excluded adults into the financial system,” said Frederic Nze, founder and CEO of Oakam. 

“Our digital customer journey gives us access to new insights and data sources that are accelerating inclusion and challenging traditional definitions of creditworthiness.”

Data from FICO has shown that 60-75% of traditionally unscorable consumers could be assigned a more meaningful credit score using alternative data. 

Oakam believed that its use of alternative data had yielded positive repayment behaviour among customers.

Some 70% of new customers made on-time repayments – despite previous challenges accessing credit due to their income levels; court judgements on prior loan defaults; status as a new resident of the UK; the absence of credit history or low credit scores; or some combination thereof –according to a study of 15,000 first-time Oakam customers between January 2015 and July 2016.

Oakam has also observed a 25% improvement in on-time repayment since April 2017.

“City University is constantly looking for ways to innovate and partner with market-leading companies making the partnership with Oakam a great fit,” said Dr Lara Zibarras, senior lecturer in organisational psychology at City University and head of the initiative with Oakam. 

“Pushing the boundaries of alternative underwriting will begin to open doors for greater financial inclusion and help those who need it most.”

“The full potential of alternative data in cracking the challenge of global financial inclusion is far from being reached,” added Frederic. 

“The benefits of digital approaches to micro-lending are just beginning to show. 

“As more financial services providers embrace innovation, financial access and equality will accelerate across the developing and developed worlds.”